Self Assessment “Payment on Account” 31 Jan + 31 Jul: Why You Owe Twice & How to Reduce It (2026)
If you file your Self Assessment and suddenly HMRC asks you to pay a big amount on 31 January — and then again on 31 July —
it can feel like you’re being charged twice.
You’re not. You’re seeing two different things on the same statement:
(1) the “balancing payment” for last tax year, plus (2) an advance payment for the next tax year called Payments on Account (POA).
Quick answer (the 30-second version)
- 31 January: pay what’s still owed for the year you just filed (“balancing payment”) + first POA for the next year.
- 31 July: pay the second POA (the other 50%).
- Each POA is usually 50% of last year’s tax bill (often includes Class 4 NIC if self-employed).
- If your next-year income will be lower, you can reduce POA — but reduce too far and HMRC can charge interest on the shortfall.
1) What “Payments on Account” actually are (and why HMRC uses them)
Payments on Account are advance instalments towards your next Self Assessment bill.
HMRC uses them to spread the cost — instead of waiting until the following January.
The standard setup is simple:
two instalments, each usually half of last year’s bill, due by midnight on 31 January and 31 July.
2) Why it feels like you’re paying twice on 31 January
On 31 January, HMRC often collects two different buckets at once:
| Line on your statement |
What it is |
What year it relates to |
| Balancing payment |
The remaining tax due for the year you just filed |
Last tax year (the return you submitted) |
| 1st Payment on Account |
Advance instalment (usually 50%) |
Next tax year |
Then on 31 July you pay the 2nd Payment on Account — the other 50%.
3) The exact calculation (with a realistic example)
In many cases, HMRC calculates POA from your previous year’s Self Assessment liability (often including Class 4 NIC if applicable).
Each POA is usually:
Each POA = (Previous year’s SA tax liability) ÷ 2
Example
- 2024/25 return shows tax due: £6,000
- POA instalments for 2025/26: £3,000 (31 Jan) + £3,000 (31 Jul)
- On 31 Jan you might pay: £6,000 (balancing) + £3,000 (POA) = £9,000
- On 31 Jul you pay: £3,000 (second POA)
4) Who does NOT have to pay Payments on Account?
Many people can avoid POA entirely — typically when their prior bill is small or most of their tax is already collected at source.
The most commonly cited thresholds are:
- Your last Self Assessment bill is under £1,000, or
- At least 80% of your total tax is already collected at source (for example through PAYE).
5) How to reduce POA safely (SA303) — without creating a nasty surprise
If your income will drop (fewer contracts, lower rent, one-off bonus ended, etc.), you can claim to reduce your payments on account.
HMRC allows this via SA303 (online or form).
Safe reduction method (practical)
- Estimate your next-year profit/income (use last year as baseline, adjust the known changes).
- Estimate your tax (roughly) and compare it to what HMRC expects via POA.
- Only reduce POA to a number you can defend (keep a note of assumptions).
- If your estimate is uncertain, reduce partially (e.g., 20–40%), not to zero.
Warning: If you reduce too much and end up owing more, HMRC can charge interest on the underpaid amount.
Reduce when you have a credible reason, not just cashflow pressure.
6) “I can’t pay by 31 January” — what to do instead of ignoring it
If the issue is cashflow (not overestimation), reducing POA may be the wrong tool.
Your better option is usually a Time to Pay arrangement (instalments).
Time to Pay is designed for people who can’t pay in full on time — it’s not a loophole, but it can prevent the situation from escalating.
7) Reduce POA vs Time to Pay: which one should you use?
| Your situation |
Best tool |
Why |
| Income will genuinely be lower next year |
Reduce POA (SA303) |
POA is based on last year; you’re correcting an overestimate |
| Income is similar, but you’re short on cash |
Time to Pay |
You still owe the tax; you’re changing the payment schedule |
| You’re unsure / volatile income |
Partial POA reduction + budgeting |
Avoid under-reducing (waste cash) or over-reducing (interest risk) |
8) Checklist: do this before you hit “Pay”
- Confirm which tax year the charge relates to (balancing vs POA).
- Check if you actually meet the conditions where POA is not required (bill size / tax deducted at source).
- If reducing POA: keep a short written estimate (income assumptions + reason for reduction).
- If cashflow issue: consider Time to Pay, not POA reduction.
- Bookmark the 3 internal links above for next steps (Time to Pay / penalties / enforcement).
FAQ
Q1) Why am I paying on 31 January and 31 July?
Because HMRC splits next year’s estimated tax into two advance instalments (POA). 31 January often includes both the prior-year balancing payment and the first POA.
Q2) Can I reduce my payments on account to zero?
Only if you have a credible reason (for example, you genuinely expect no tax to be due). If you reduce too far and later owe more, HMRC can charge interest on the underpaid amount.
Q3) Is POA the same as a penalty?
No. POA is an advance payment. Penalties apply if you miss filing/payment deadlines, depending on the circumstances.
Q4) What’s the best move if I cannot pay by 31 January?
If the tax is genuinely due, explore Time to Pay (instalments). Reducing POA is for correcting an overestimate, not for hiding cashflow issues.
References (official)
- GOV.UK: Payments on account (how it works, dates 31 Jan + 31 Jul)
- GOV.UK: Self Assessment deadlines (31 January pay, 31 July POA)
- GOV.UK: Claim to reduce payments on account (SA303)
- GOV.UK: If you cannot pay your tax bill on time (pay in instalments / Time to Pay)
This article is general information, not tax advice. For complex cases (CGT adjustments, mixed PAYE + self-employed income, or large one-off gains), consider professional advice.
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